Labor's 6 fatal mistakes

Labor's downfall at the next election can be attributed to six major mistakes where it lost sight of sound policy principle and process, in favour of the NSW Right disease of deal-making and short-term political opportunism.

While a week is a long time in politics and we’ve got 30 weeks until the September election date, the evaporation of support for Labor in the latest Nielsen Poll suggests Labor would need a miracle to turn things around. 

In the end they only have themselves to blame, or rather they have Rudd, Swan, Gillard and the NSW Labor Right disease of policy by short-term deal-making to blame. 

It is when this gang of three lost sight of sound policy principles or abandoned rigorous process, and lacked the guts to own a policy including its inescapable warts, that they got themselves into trouble. The reality is that if you actually want to achieve something significant in government, you’re going to put some noses out of joint.  You have to accept that and have the courage to defend your policy as the right thing to do in spite of the problems it causes some parts of the community.  

When you let yourself be led by the nose of tabloids, shock jocks, unqualified focus groups, and noisy lobbyists, trying to cut deals at the last minute to make an issue go away, you end up with bad decisions.  This might help you out in the short-term, but usually bites you on the bum later. Critically it gradually undermines your credibility with the electorate making you appear erratic and untrustworthy.

There were six critical mistakes where Labor abandoned sound policy principle and process instead thinking only of short-term political advantage:

1) Promising black and blue to deliver a budget surplus when it was highly unlikely to be achieved and not economically advisable;

2) Rushing the introduction of the mining tax and then rushing the subsequent renegotiation of the tax;

3) Abandoning the emissions trading scheme on false pretences in favour of a citizens' assembly;

4) Disowning their emergency stimulus response to the Global Financial Crisis;

5) Lacking the guts to take Abbott to a double dissolution election in February 2010; and

6) Wasting their first two years of government using climate change as a political wedge instead of seizing an opportune moment to implement major reform.

These mistakes will be the reason an election is lost, not Slipper, not Craig Thomson and not even Tony Abbott.

Covering off on all of these mistakes is not possible in one article, so today I'll deal with the two that have been in the headlines most recently before addressing the other four tomorrow.


Mistake 1 - Promising black and blue to deliver a budget surplus when it was highly unlikely to be achieved and not economically advisable

Back in 2007 I heard Lindsay Tanner colourfully explain how focus group testing suggested the electorate saw Labor like a neighbour you like to share a beer with, who has great ideas and a heart of gold. But when you lend them the lawnmower they return it to you broken and they seem to get into money troubles. The Libs on the other hand were a bit like an accountant brother-in-law. Not much fun, but you could trust them to manage money.  

An irrational fear of this stereotype image in the mind of the electorate is what drove Swan and Labor to make the utterly stupid decision to promise black and blue to deliver a budget surplus.  It was always going to be a very fine thing whether they managed to pull this off. It meant employing all kinds of ridiculous chicanery in order to get the number for 2012-13 to read black instead of red.

But did it matter?

Every respected economist said no. In fact several said in light of depressed consumer confidence and wide discrepancies in economic activity across regions it was not the right time to slam the fiscal brakes.  Australia’s triple A rating was safe. And our debt levels are well within our capacity to repay them when they fall due.

Wayne Swan lost sight of what really mattered, and in the end has actually ended up magnifying the electorate’s scepticism of their capability to manage money.

Mistake 2 - Rushing the introduction of the mining tax and then rushing the subsequent renegotiation of the tax

The handling of the mining tax should be inserted into the politics 101 textbook as lesson number 1 in how not to conduct policy.

It started-off quite well - commission a group of experts and key stakeholders with high standing to have a comprehensive look at how the taxation system could be improved.  They then commission a range of research papers from learned academics, publish an initial discussion paper and then allow plenty of time for stakeholders to make submissions before publishing a final report of recommendations.

Problem was that Rudd and Swan then didn’t release the final report of recommendations, choosing instead to sit on it for several months worrying about its potential for a political scare campaign.  They then finally released it with a fait accompli response to adopt holus-bolus Henry’s theoretically elegant but impractical resource rent tax proposal, without having let anyone have a chance to look at and debate the various recommendations. 

The thing was a resource rent tax to replace royalties is an excellent idea, it was even recommended by the Minerals Council in their submission to the Henry Tax review. But Henry’s idea that a super profit applied after a 6% return based on the idea government would reimburse losses was never going to fly except in an economics class.  

If Rudd and Swan had allowed the public to see and debate the proposals, they would have allowed all the stakeholders to have a go at each other (rather than the Government) steadily knocking the impractical edges off Henry’s ideas and allowing the public to appreciate why a resource rent tax was a good idea.

Then they made things even worse by suddenly axing Rudd and allowing the miners to dictate terms around the shape of the eventual tax.  They now have a tax that has barely raised any revenue and look like a treacherous rabble that again can’t be trusted with managing the finances.  

To be continued with mistakes 3 to 6 tomorrow. 

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